After eight rounds of shadow-boxing in the coordination committee on the Indo-United States nuclear deal, it has become obvious that Prime Minister Manmohan Singh does not have a credible strategy to deal with either the concerns of the Left parties or his own government.

The committee was first mooted last September to review the Left’s objections to the Hyde Act. But when the Left agreed to allow the Government to negotiate a safeguards agreement with the IAEA, the understanding was that the committee would specifically parse and then approve or reject the draft agreement. Though the draft has been ready for some time now, however, the government has chosen not to share the text. While confidentiality is an issue, the government knows it cannot proceed without taking the Left into confidence. One reason for its reluctance to share the text, then, could be that the draft falls short of the Prime Minister’s promises to Parliament. Given the quality of the negotiating team India deployed in Vienna, however, this is unlikely.The real reason is probably that differences with the Left on the basic principles underlying the deal run so deep that there is little sense in the two sides jointly poring over the safeguards text.

At the heart of these differences is a curious paradox: the fate of the nuclear deal is actually of secondary importance for the Left parties. Their main concern is the growing strategic and military alliance with the U.S. Coming at the issue from the opposite side, the U.S. shares this ordering of priorities. But where the Left sees danger, the Pentagon sees opportunity: If it can get India to swallow the bitter pill of a military partnership without the sugar-coating the nuclear deal provides, Washington isn’t going to complain. The nuclear deal can sink as far as the U.S. is concerned so long as military ties forge ahead. During Secretary of Defence Robert Gates’ visit to India in March, for example, the deal was of peripheral concern. What he wanted was progress on military acquisition, access and interoperability.

While the Left and the U.S. seem clear about what is at stake, the Prime Minister faces a dilemma. If he could find a way of reassuring the Left that India has no intention of pursuing a closer military and strategic partnership with the U.S., he could probably salvage the core of the nuclear deal. But the more India tries to rid the nuclear deal of the military-strategic baggage the U.S. has loaded on board, the less will be Washington’s enthusiasm to deliver its side of the nuclear bargain. The negotiating history of the past two years provides ample evidence of this inverse relationship. For example, instructions to vote against Iran at the IAEA were issued right after President George Bush told Prime Minister Singh during their meeting at the Waldorf Astoria in New York on September 13, 2005 that the fate of the nuclear deal was linked to Indian support on the Iran issue. This threat was repeated again in January 2006, on the eve of the IAEA’s second vote.

With the nuclear deal on temporary hold, India’s position on the Iran nuclear issue has reverted to what it was prior to September 2005 — that it should be resolved through diplomacy rather than sanctions and force. However, the Prime Minister is still pursuing a “make haste slowly” policy over the Iran pipeline for fear of irritating the Americans. In July 2005, the Left parties had said the pipeline was the “touchstone of an independent foreign policy.” By pressing ahead on that front, Dr. Singh could address the Left’s apprehensions about the deal affecting foreign policy. But the Prime Minister fears the U.S. will lose interest in pushing the nuclear deal the day a formal agreement for the Iran pipeline is signed.

There are ways of calibrating this balance and breaking the stalemate over the deal but the government’s political managers seem to be doing little other than hoping for a miracle.

The India-U.S. civil nuclear energy agreement requires four steps for completion. First, the IAEA Board must approve India’s safeguards agreement. Second, the NSG must amend its export guidelines to give a clean exemption to India. Third, the U.S. Congress must approve the bilateral ‘123’ nuclear cooperation agreement. This is the least important step from India’s viewpoint for if the first and second steps are clinched, failure to approve the 123 will only disadvantage U.S. suppliers. The fourth and final step is India signing its IAEA safeguards agreement.

Time is a factor but it is not as much of a binding constraint as the nature of the NSG exemption. Of course, the longer the India file takes to get to the NSG, the greater the danger that opposition to the deal within the 45-nation cartel will strengthen. However, as early as last fall, barely weeks after the 123 agreement was finalised, it was clear that the U.S. itself was redrafting its NSG proposals to the detriment of India.

Part of the problem is that the UPA has wasted enormous effort making spurious arguments in favour of the deal’s less defensible elements like the Hyde Act. The Hyde Act is not binding on India and may not even be binding on the Bush administration but a future administration can always use it, should it so desire. By the same token, the deal’s critics should also not be overly preoccupied with Hyde. For even if the Act had been perfect from the Indian perspective, a future administration could always amend it or tear it up. The issue, therefore, is not textual protection but practical insurance against American double-dealing, and the latter can only be achieved by minimising nuclear imports from the U.S.

When the UPA and the Left meet on May 28 to decide the fate of the deal, they should evaluate the likely consequences of either going forward or standing still. Broadly speaking, there are nine scenarios, each of which has different probabilities of occurrence and different levels of associated strategic risk.

Scenario 1: The Left allows the safeguards agreement to be sent to the IAEA if the government agrees not to sign it until all restrictions on India have been lifted and to not operationalise the 123 agreement without the coordination committee’s approval. After the IAEA Board’s approval, the U.S. asks the NSG to change its guidelines. Given the Left’s qualified backing, India stresses that anything other than a clean exemption is unacceptable. If the exemption is clean, India immediately operationalises its bilateral agreements with Russia and France. At this point, the U.S. Congress may insist on amending or vetoing the 123 agreement. Alternatively, the Left may threaten to topple the government if the 123 is operationalised. Either way, the Hyde Act would remain a dead letter. The U.S. will have gained no additional levers of influence over the conduct of Indian foreign and strategic policy. Risks: Very low. Probability: Low to medium.

Scenario 2: Same as 1, except that the 123 agreement is approved. Here, India buys lots of U.S. nuclear material and fuel and finds itself under pressure to support U.S. policies on fronts such as Iran and the pipeline. Risks: Very high. Probability: Low to medium.

Scenario 3: Same as 2, except that India buys only limited amounts of U.S. nuclear equipment and fuel. Though pressure to follow U.S. policies is great, Washington does not have much leverage because of India’s limited exposure. Risks: Very low. Probability: Medium.

Scenario 4: The Left allows the safeguards agreement to be submitted but the IAEA Board shoots it down. This would be a diplomatic setback since it would puncture the notion that India’s status as a de facto nuclear weapon state enjoys wide international support. Risks: High. Probability: Very low.

Scenario 5: The Left allows the safeguards agreement to be submitted, the IAEA Board approves it but the NSG sets impossible conditions. At this point, India walks away with dignity. The U.S. is shown up as a country that could not live up to its word. Risks: Low to medium. Probability: Low to medium.

Scenario 6: Same as 5 but the NSG imposes “borderline” conditions on the implementation of its waiver. The government consults the Left and all political parties on what the best course of action is. Risks: Low to medium. Probability: Medium to high.

Scenario 7: The Left parties block the deal at the present stage. The nuclear agreements with Russia and France remain a dead letter. Meanwhile, the underlying military partnership between the U.S. and India continues to grow. Risks: Medium to high. Probability: Medium to high.

Scenario 8: The same as 7 except that the Left also manages to reverse the underlying military partnership with the U.S. Risks: Low to medium. Probability: Low.

Scenario 9: Same as 7 except that Russia and France break ranks after a while and agree to start nuclear cooperation with India and eventually the U.S. itself comes around to offering better terms. Risks: Very low. Probability: Very low.

A prudential strategy would minimise the risks — that is, buy as little nuclear material as possible from the U.S. or other countries imposing unwelcome conditions — while simultaneously expanding the energy options available for the country such as gas by pipeline. A country of India’s size can have its cake and eat it too. The U.S. wouldn’t mind a situation where India rejects the lifting of nuclear sanctions the deal envisages but not the strategic partnership which lies behind it. The challenge for the Left and the UPA is to craft a strategy where that equation is reversed.

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5 comments on “Nine scenarios for the nuclear endgame”

Problem with India is that we do not have strategic thinking, America wants millitarily strong India, so that it can hedge against china. Is it not in india’s interest to be millitarily strong? If it benefits USA, then whats the harm in it.

“U.S. itself was redrafting its NSG proposals to the detriment of India”The Left should demand thatwhatever US tries to do behind the doors in the NSG which are not in the interests of India should have be met with kind in the form of negative repurcussions on the US-India military cooperation front.

Sir, Thank you very much for the most insightful thoughts about this nuclear deal. However complicated the arguments are, the solution still remains simple, “A country of India’s size can have its cake and eat it too.”